EXPERT FINANCIAL ADVICE

Question: Hello. My husband and I are 48 years old and have just recently sold both our business and our home. We are currently leasing a home. We have about 60K in retirement savings, 35K debt on a credit card and 200K debt to the IRS which we are currently working on an installment payout. We have 2 children in college and 2 more in high school. We do have Texas Tomorrow purchased for them so tuition is not a worry (one of the ONLY things we have done right.

My husband expects to earn about $200K this year, so we see ourselves basically starting over. Obviously the IRS tax burden is devastating, but we hope to be able to dig ourselves out with some very hard work.

My question is: should we purchase a home? We don't have much to put down and I am leery of the IRS putting a lien on it (happened on our last house) but yet with his relatively high income I'm afraid we don't have many deductions and may come out owing a lot more taxes this year.

Could you address the housing issue and anything else you feel pertinent? Thank you very much. -- Carolyn

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Question: I itemize medical expenses each year as part of my itemized tax deductions. On my tax return for 2008, I claimed the amount I paid for a medical test. At the end of December, 2009, my medical insurance refunded some of the amount I paid for this test after correcting an error in coverage that they made. The check was dated December 29, 2009 but I received the refund check during the first week of January 2010. Should I reduce the amount of medical expenses claimed for 2009 by the amount of the refund since the check was issued in 2009, or should I reduce medical expenses claimed for 2010 since I did not receive and cash the refund check until 2010?

I made a cash donation at work to a Salvation Army Angel Tree Christmas campaign. Can I count this donation as part of my itemized deductions. I do not have a statement from the Salvation Army for the donation, but I can get a statement from the coordinator at work who collected donations. Is that sufficient documentation of the donation?
--John

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Question: My husband and I are 55 and 57 - we have been invested in the market directly and also in mutual funds. We are being approached about investing in annuities which I find somewhat hard to understand - do you think annuities are a good investment. -Janie

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Question: I am considering doing a partial IRA to ROTH IRA conversion and I'm concerned about the 5 year rule impact on future withdrawals. Here is my situation.

I established and funded my ROTH IRA prior to 2003, so it is now over 7 years old. I made investments in it for all 5 years prior to 2003.

My original investments have grown substantially. For argument sake, let's say my original $20,000 contributions are now worth $100,000.

I am now age 62 and am considering converting a stock worth $30,000.

How will the 5 year rule affect the following:

1. My original $20,000 investment
2. The $80,000 gains I have earned so far
3. The $30,000 stock converted from my IRA
4. Future earnings on both.

My research on the internet has resulted in two answers. The one I like best is that the 5 year rule does not apply at all since I'm over 59 ½ when I do the conversion. The other is that I will be subject to the 10% penalty if I withdraw anything other than the original $20,000 and the $30,000 conversion before 5 years have expired.

I'm concerned about being locked out of my $80,000 earnings to date.

Can you clarify?

Regards -- Thomas

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Question

In the not too distant future we will inherit a house valued about $125,000 that would lease for approx. $1,000 per month. We would like to know which would be the best return over the long run, sell and invest proceeds or lease it out? We were also considering the tax advantages of either choice. Thank you for your time and thoughts on this.

Arthur

Question

Hello,

I have approximately $40,000 from cashing in a life insurance policy. I plan to use it for my high school junior's college education next year. Right now, it's sitting in our B of A savings account earning very little. What do you recommend I invest in for about a year until it (at least some of it) will be needed for college expenses?

Thanks,

Peggy

Question:

We have about $136,000 in flexible premium deferred annuities. The rate of new money is 3.50%, however it quickly becomes "old" money and is giving about 1% of interest. Can we annuitize this money and roll it over to an IRA or Roth IRA without having to pay taxes on it?

We are 65 & 64 and retired educators working part-time with an annual income of about $115,000. We live debt free and own a home valued at about $200,000. We have CD's and an emergency fund totaling about $150,000

Kaye

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Question:

We recently inherited a life annuity and two IRA's, total amount about 400,000. Both were purchased by my Father in Law with after tax funds. He purchased the funds in the 1990's. He was 89 years old at the time of his death, and has been taking the mandatory withdrawals.

The funds show as equal beneficiary's his three children, one of which wishes to withdraw their portion this year.

It is my understanding that an immediate withdrawal will make the amount the fund or annuity has earned taxable, while the original amount is not taxed. Is this correct?

My wife and I wish to avoid paying any unnecessary taxes, not to mention increasing our tax rate for the year. We are considering continuing the IRA and Life Annuity with our portion of the inheritance, which I understand we can do.

Will you please provide us with advice on what you think our next step should be?

Horace

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Question

I got laid off in 2009. At the time, I had been contributing to a SEP. I still have money in it. Can I take deductions from my 2009 taxes for contributions made to the SEP in 2009?

Thank you

Question

My wife has recently inherited $50,000 and we would like your advice on the Safest place to put it and where it will earn the most interest. She does not plan on touching it for at least two years. Would a 24 month CD paying 2.53 % APY with one "bump up" be better than putting the $ in Treasury Inflation-Protected Securities? If neither of these are good options, what

Would you recommend?

Thanks for your help. L.R.

Question

Debt free

Is this company ok to work with bulldoze my debt.

Question: My father-in-law is 85 yrs old and has 12,000 dollars that he wants to put into something relatively "safe" but that gains more interest than a CD. Do you have any recommendations maybe some sort of mutual fund? This is not money that he needs at the moment for income. He also has 20,000 in an annuity that is about to expire. Again, he doesn't really need the monthly income from his annuity. Would it be better to take the 20,000 out of the annuity and put it somewhere else or should he leave it in and start taking monthly payments? What are the tax implications? --Gary

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Question

My wife and I have had our taxes done by H&R Block Premium the last few years, after having our first child and hiring a nanny for childcare. Our tax preparer was providing us info on how to handle the tax implications of being an employer, but after much confusion this tax season, we feel our preparer is not adequately informing us and is really just preparing our taxes instead of guiding us to the most financially beneficial decisions regarding how we deal with our 'employee'.

My main question is this: would a CPA be a better choice for tax advice and preparation vs our current solution, or is the best solution really to hire a CFP? We aren't in the position of doing a lot of investing, hence why we've shied away from a CFP, but it seems like we aren't prepared each year for tax season, which is the biggest financial pain we deal with. And whichever direction is best, can you please recommend the best approach (website, past article, whatever) to find either a CPA or CFP?

Thank you very much -

Josh

Question

I want to provide a steady monthly income for my wife. I have 150,000 plus to start with but can add $2000 per month if it is possible. The problem I face is that I am 79 years old (30 years older than her) and in good health I do not owe any debts the house is paid for and clear. My income will stop upon my death and I want to provide approx. $2000 per month. I have been adding the maximum to an IRA for her each year but she will not be able to use this due to her age.
Any suggestions?

Thank you

Louis

Question

I have a short question, should I pay all my utilities for the rest of year, and therefore pocket my social security, check, knowing it is mine, till December 2010
thank u

QUESTION:

We are 59 and need help with our large debt. My husband is currently unemployed and we have only $30,000 in savings. I have about $65,000 in mutual funds. We have 2 kids in college and have taken a lot of student loans. We have a lot of debt on credit cards. We now cannot sell our house worth about $360,000 and down size because we can't get a loan. We have already taken a lot of equity out of our house. I am a school counselor making about $60,000. I know there are consolidation programs and people that can help but I don't want to go through a lot of history and it end up costing us money. Where can you direct us?

A. G.

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Question:

In 2009, my company laid me off in March. I got a W-2 for January through March. With the work that I had done while employed during that time, will I be able to take the EITC credit?

Also, I had money in a SEP at the company. Since I am not at that company now, how should I report that money in filing taxes?

Confused in Dallas

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QUESTION:

This year I will have to take my first RMD for my traditional IRA. Should I sell stocks that have gained or lost for the distribution?

P. W.

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Question:

My daughter is a full time student and has Series EE savings bonds
that were given to her when she was little. (Issue Dates are all in
the late 80's early 90's) Every year she cashes a few and uses them
for college costs, but when we prepare her taxes she is still required
to pay tax on the bond income. I thought Savings Bonds could be cashed
and were tax free if used for education. I have read the rules on this
at Tax help sites and they make no sense. Her income is very low for
the year as well. (less than 8,000 in summer job) She is 22 years old
and files her own taxes and I hate it that she is taxed on this income
as it hurts the savings bonds values in the end. Thanks for your help
on this.

Jo Ann

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Question:

I was laid off from my job in 2009. I applied to my mortgage bank for a loan mitigation. After 6 months my bank turned my request over to a loan mitigation processing company. The loan mitigation company reviewed my application and determined that I do not qualify for a loan mitigation according to Fanny Mae rules. They will not explain why I do not qualify and are reluctant to give me written notice. Is there any way to get access to the rules? Thank you.
John

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Question

I am using TurboTax to file my taxes and generally don't have a problem understanding the interview questions but not on this issue. My wife and I both work. I answered the questions on the interview noting that neither of us received SS, railroad or veterans benefits from Nov 2008 - Jan 2009. TurboTax shows my wife and I are eligible for $689 in Making Work Pay Credit. It goes on to say that most people already benefit from this credit by lower federal income tax deductions on payroll. I work for a major company but have no idea if my company has already figured the tax reduction in my withholding or not and I don't know how TurboTax would know that either. Based on what I entered it says I'm eligible for the credit. Is there something I'm missing here or just more of the government handing out money to us we will eventually have to pay back with higher taxes?

Thank you

Confused in Rockwall

Question: I know that the limit for an HSA contribution for 2009 was $5950 and I contributed the full amount.
My company also contributed in the amount of $1000. I recently received a form 5498-SA from my HSA showing a contribution of $6950.
Did I go over the allowed maximum? If so, what do I do about it? Can I still withdraw money and show it for 2009? Can I just deduct my part ($5950) on my taxes? Help.

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Question: I'm getting close to retirement (within 1 year) and I am confused about asset allocation. I sometimes think I currently have my 401k allocated very aggressively for my age. I have always considered social security and the pension I will receive to be part of my "overall" portfolio, although I realize that these 2 parts are not anything I can self direct or re-allocate. As a result, I've kept my 401K allocation roughly 80-20, (equities-bonds). I'm diversified in my holdings with domestic and international stock funds.
The 80-20 seems high, unless you consider the pension and SS as virtual guaranteed returns. Then the allocation of my total holdings comes in around 35-65, (equities-everything else)

Should I be considering the pension and SS this way? Why or why not?

Thank you in advance and I'm really enjoying the "Your Money" section in the paper. This type of information is in desperate need in my opinion. -Bruce

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Question

My wife and I would like to reduce the amount invested with our FA to save on annual fees. She currently bills us at .90 against our total. This costs us roughly $6000 a year plus we still have to pay load fees etc. on actions taken. About 1/3 of our account is in an IRA which we heard we can remove from the account without penalty but we don't know if the information is true. Nor do we know how to go about actually doing this. We have had an account with our FA for a bout 4 years and feel we want to control some of our own money. Can you help with a suggestion to go about this.

The other 2/3's is in mutual funds and such and we would like to have that too, if it didn't cost us. We feel like we are in a trap right now cause if we cash out everything with her we will lose money for good. We want to be smart about this. Slowly get money back in our control is the goal.

Thank you for your time and we eagerly await your suggestion.

Question

I have an IRA with KBS REIT. I paid $10 per share for 1900 shares and it was worth $19000. In November 2009 I received a statement saying shares were now $7.00 and value $13000. My financial advisor said not to worry, but I am worried. Should I take my money out or stay in this investment?

Additional Question:

I know you haven't had time to reply but this is my second request. My question is should I roll over what's left into something else, or leave it there as my advisor says.

Thank you.

Sara, Senior Citizen